Quarterly Economic Review March 2024
Published: Friday May 31st, 2024
The Central Bank of The Bahamas is pleased to announce the release of its Quarterly Economic Review for the First Quarter of 2024. The Review provides an examination of the domestic economic performance, as well as sectoral developments, principally during the period January to March.
During the first quarter of 2024, preliminary indications are that the Bahamian economy maintained its growth trajectory, albeit at a more tempered pace, with economic indicators returning closer to their expected medium-term potential. Tourism output remained expanded, supported by robust gains in both the high value added air segment and sea traffic, as the demand for travel in key source markets persisted. Further, a number of small to medium-scale foreign investment-related projects undergirded activity in the construction sector. In price developments, domestic inflation moderated, reflective of the pass-through effects of lower global oil prices on imported oil and other goods.
Provisional estimates for the second quarter of FY2023/24, revealed that the Government’s deficit narrowed relative to the same quarter of FY2022/23. Underlying this outcome was a VAT-led expansion in aggregate revenue, combined with a reduction in total expenditure. Budgetary financing was secured from both domestic and external sources, but was led by internal borrowings and comprised of a mix of long and short-term debt instruments.
In monetary developments, bank liquidity expanded, as the buildup in the deposit base contrasted with the decline in domestic credit. In addition, the accumulation in external reserves extended, relative to the prior year, bolstered by net foreign currency inflows from real sector activities and Government’s external borrowings. Meanwhile, buoyed by improving economic conditions and ongoing loan write-offs, banks’ credit quality indicators improved during the review quarter. Further, the latest available data for the fourth quarter of 2023, showed that domestic banks overall profitability levels increased, underpinned by a reduction in provisions expense for bad debt, and gains in other non-interest income.
In the external sector, the estimated current account deficit widened during the review quarter. The outturn was reflective of an increase in the merchandise trade deficit, combined with a shift in the secondary income account to a deficit from a surplus, and a rise in the primary income account deficit, which overshadowed the expansion in the services account surplus. Further, the financial account inflows—excluding reserve assets—contracted, owing largely to a switch in portfolio investment transactions to a net outflow, from a net inflow a year earlier. Meanwhile, the estimated capital account transfers reported nil transactions during the first quarter, similar to the preceding year.
The report also features a review of financial services activity in 2023 and its contribution to the overall economy. The results of the survey showed a reduction in international banks’ balance sheet activities, which overshadowed gains in domestic banks’ assets in 2023. In addition, fiduciary activities grew in the review year. Further, employment within the banking sector grew, as Bahamian positions increased. Expenditure also increased on account of a rise in operational costs. Meanwhile, credit unions registered expanded contributions to the economy, evidenced by gains in balance sheet assets, while the securities industry showed an increase in digital asset businesses, corresponding with an expansion in the value of international assets under management. However, domestic insurance activity was relatively subdued over the review year.
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